Trends in Southeast Asia: The politics of the Asian Infrastructure Investment Bank (AIIB)

The 18th South Asian Associations for Regional Cooperation (SAARC) summit took place at Kathmandu, Nepal on November 25 and 26. The heads of the eight states of South Asia took part in the summit.
Kathmandu was a showcase of what has happened repeatedly in the three decades since the birth of the SAARC. Leaders make rhetorical speeches and spend time on expensive retreats and sightseeing — then head home forgetting what was said in the summit hall.
“SAARC remains largely ineffective, hostage to the political polemics of member-nations particularly India and Pakistan,” said Professor Imtiaz Ahmed of the International Relations department of Dhaka University.
A People’s SAARC summit was held as an alternative in Kathmandu from November 22-25. About 5000 social and political activists took part its opening ceremony on November 22. There were 71 workshops held to discuss an alternative agenda for SAARC heads of the state to consider.
It was organised by People’s SAARC Steering Committee, made up of 14 leading activists from all eight countries of the region.
Three agreements were supposed to be signed at the 18th SAARC summit to improve road and rail connections, and integrate power trade in the region.
The eight-member countries of SAARC are India, Pakistan, Afghanistan, Nepal, Bangladesh, Maldives, Bhutan and Sri Lanka. Since its inception in 1985, SAARC signed a number of agreements and conventions, but faltered in translating ideas into collective actions.
For an instance, the SAARC Regional Convention on Suppression of Terrorism was inked in 1987, within two years of the group’s birth. Extra protocols to the convention updated the strategies in 2004. But, in reality, it was not effective, as several South Asian nations have seen a rise in terrorism.
There are other examples as well. The SAARC Preferential Trading Arrangement, which was finalised in 1993, came into effect in 1995. It was followed by the South Asian Free Trade Agreement in 2004. But those remain unimplemented, as issues of non-tariff and para-tariff barriers are yet to be addressed.
Moreover, the SAARC Food Bank Agreement was signed in 2007, but it is yet to be implemented. SAARC Development Fund was constituted in 2008 and SAARC Seed Bank in 2011, but none of those has seen much success.
Two of the important SAARC countries, Pakistan and India have been close to war on several occasions during the last 30 years of its existence. Border clashes have become a norm in recent months particularly since Indian Prime Minister Nardner Modi has come into power in India.
Pakistani Prime Minister Mian Nawaz Sharif and Modi both shook hands and spoke informally for five minutes. That was all what they had to offer each other. The two nuclear-armed nations have already broken the thread of negotiation earlier this year after some clashes at the border of Kashmir, a territory both countries claim as their own.
The SAARC summit failed to address the growing threat posed by religious fundamentalists groups. The ascendance of religious extremism and intolerance is a serious challenge to democracy in the region.
Pluralism and diversity, which are the hallmark of the region, are under threat from such groups, which often enjoy overt or covert patronage from the state. Women’s rights and other freedoms are the first to be targeted by extremist groups.
The region is fraught with conflicts. Security is diminishing and governments’ militaristic response, far from resolving these conflicts, is undermining the rule of law and increasing insecurity.
The number of conflict-induced internally displaced persons and refugees in the region have spiraled.
People’s rights have deteriorated in recent years, in particular, to freedom of association, freedom of expression and the right to protest.
Freedom of press remains threatened and the independence of the media is seriously compromised by the growing influence and control of vested interests, including the corporate sector.
The preparation for this SAARC summit was going on for months in one of the poorest country in the region. In Kathmandu, there was a big drive to clean most roads on the way to venue. The ruling elite in all SAARC countries very fond of the impressionist strategy of cleaning the roads prior to such meetings.
It will be business as usual after the event is over. I personally saw soldiers cleaning the roads of Kathmandu three days before the main event. This is a rare scene in most countries of South Asia. Soldiers are normally there to rule, not clean the streets.
The People’s SAARC summit issued a joint declaration after holding all of its seminars, workshops and other events to formulate a joint strategy and point of view. It reaffirmed commitments to justice, peace, security, human rights and democracy in the region on the basis of equality for all and the elimination of all forms of discrimination.
The declaration said that peoples must unite to challenge the systematic and structural marginalisation and exclusion of people through the dominant neoliberal economic model.
This model is violently restructuring the region’s economic policies and cultural life, and undermining and devaluing the values and institutions of democracy.
We have come together to resist the threat to democracy from chauvinism, sectarianism, and communalism. Increased securitisation and militarisation of states and society in the name of combating terrorism and defending national security and increasing arbitrary detention, torture, custodial rape and extra-judicial killings have reduced space for democratic dissent and freedoms.
We have come together to respond to new challenges that have emerged in the form of climate change and environmental degradation which are of transnational dimensions; extraction of natural resources; food, water and energy crisis; and resource grab by governments and corporates.
We must fight growing violence against women and girls, lower caste members, various tribal groups and indigenous peoples. Must must oppose discrimination against all minorities, including religious, sexual, linguistic, cultural and ethnic minorities, persons with disabilities, migrants and refugees.
The systematic and structural processes and practices of discrimination further reinforce and reconstitute traditional forms of exploitative and oppressive structures. This includes patriarchy and caste, which are recreated in new forms, in the name of progress, modernisation and reform.
The People’s SAARC noted the renewed focus on SAARC by member countries and believes its stated goals of “deeper integration for peace and prosperity” is possible only when this cooperation goes beyond the interests of regional elites and corporations.
It must allow socio-economic empowerment and enable the people of South Asia to build their regional identity. It must push just and sustainable development towards re-shaping the democratic institutions.
The official SAARC summit issued a long statement filled with empty word on issues of regional cooperation, combating terrorism, poverty alleviation, development goals, food security, the environment, women’s rights and access to health and education.
The South Asian region features some of the world’s worst human development indicators. According to conservative estimates, 44% of the population of India lives in poverty on less than US$1 a day.
In Nepal, Pakistan and Bangladesh, the statistics are slightly better — at 38%, 31% and 29% respectively. In Bhutan and Afghanistan, where data is unavailable, the proportion of people living on US$1 a day or less is likely comparable with India in Bhutan’s case and much higher in Afghanistan.
Internationally, South Asia has the worst indicators for female illiteracy and has very poor rates of child mortality.
The reason is simple. All the countries of South Asia are implementing neoliberal agendas. They are busy in privatising and taking loans from International Monetary Fund and World Bank that come with neoliberal conditions.
Capitalism in all the countries has ensured there is a great divide among the population. Some of the world’s most most rich people can be found in India as well as the most poor. Feudalism remain intact in various forms, while religious fundamentalism has emerged one of the region’s most threatening challenges.
In India and Pakistan, there is race to increase military spending and other countries are not far behind. There is no education for all, but Indian and Pakistani rulers are proud to be part of so-called nuclear nation club.
The SAARC process has become a laughing stock despite the high expectations the summit built after the friendly gestures from all the head of the states.
It is the process of the People’s SAARC that can have a positive effect by bringing together the real representatives of the people. An integrated, nuclear-free, nuclear free South Asia is still a dream to be realised.

[Farooq Tariq is a member of the core committee of the People’s SAARC and is general secretary of Pakistan’s Awami Workers Party.]

Asia needs US$8.22 trillion to fund its infrastructure investment from 2010 to 2020, and existing lending institutions such as the Asian Development Bank (ADB) are unable to meet these requirements. Asia’s annual funding requirement of US$747.5 billion is 4.5 times more than the ADB’s subscribed capital.

The Asian Infrastructure Investment Bank (AIIB) can potentially provide up to US$30 billion of funding a year. This would be on average three times more than the loans approved by the ADB in 2011–13.

Every geographical region — except North and Central America — is represented in the AIIB. The United States and Japan are the only East Asia Summit members not in the AIIB. Japan is also the only major Asian economy that has not committed to joining.

The participation of European countries transforms the AIIB from a regional institution with a singular power base (China) to an entity that is broad-based and inclusive. The “European weight” was particularly important in redressing the institutional imbalance skewed in China’s favour and may reduce small states’ concerns about Chinese domination.

Washington’s response to the AIIB initiative has been a strategic misreading that failed to anticipate its allies’ reactions in warming up to and eventually supporting the proposal. East Asian countries will now be watching what effect the Chinese initiative and American non-participation will have on the U.S. rebalance to Asia.

The AIIB effectively breaks the American, European and Japanese monopoly on global financing, and concomitantly provides China with a new mechanism to expand its political influence in the region and make a bid for regional leadership. It signals the changing order in Asia.

China’s management of the AIIB will indicate to Southeast Asia how China exercises its large and still growing power. Whether China will opt for just and benevolent leadership or one exercised with an iron fist will decide the region’s perceptions of China.

In bankrolling the AIIB, China is stepping up to assume its responsibility as a major power in committing financial resources, having political will, and espousing a long-term view and sustained interest to drive and lead regional development.